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Lexpert Top Ten Cases of 2014

The Supreme Court of Canada is very much alive to business and its concerns: that's the clear message from Lexpert's 2014 top business decisions, which, for the first time, has all 10 cases on the list emanating from the high court.

Having said that, it's perhaps surprising that the case that leads our list, Hryniak v. Mauldin, is a procedural case setting out the guidelines for summary judgment. Or perhaps not: after all, access to justice, in terms of the delays and costs associated with litigation, are a continuing thorn in the side of our business community. That's why we chose a decision that, in the few months since it was rendered, has added a great deal of credibility to the litigation process by giving judges an unprecedented degree of flexibility to summarily dispose of cases that clearly merit that treatment.

Otherwise, the Supreme Court's deliberations, as reflected in our list, engage diverse areas of law. Privacy, arguably the business flavour of the day from a legal perspective, is the subject matter of two cases. The other cases turned fundamental principles of contract law on their head; clarified the distinction between Aboriginal title and Aboriginal rights; clarified the analysis of copyright disputes; drew a bright line for the certification of class actions in Québec and, by extrapolation, the rest of Canada; confirmed securities investors' right to take a “second kick at the can” by way of class actions even after settling with regulatory authorities; put a virtual death knell to the tort of interference with economic relations; and – in an era where non-legal ownership of law firms is emerging as a reality in Canada – defined the rights of “partners” in professional associations.

The list also reflects the regional diversity of the SCC's agenda in 2014: three of our 10 decisions came from British Columbia, two each from Ontario and Québec, and one from each of Alberta, New Brunswick and Saskatchewan.

Other deserving cases didn't quite make it, often because of the need to reflect the law's impact throughout Canada. Most notable in this group is Bank of Montreal v. Marcotte, in which the SCC ruled that Québec's consumer protection legislation is applicable to federally regulated banks in the context of providing a basis for liability in class actions.

1.HRYNIAK V. MAULDIN(SCC, ON)

Recognizing that a full-blown trial was “not a realistic alternative for most litigants,” the SCC endorsed a relaxed test for summary judgment. A full trial, the court held, was not required if a summary motion could achieve a “fair and just adjudication, if it provides a process that allows the judge to make the necessary findings of fact, apply the law to those facts, and is a proportionate, more expeditious and less expensive means to achieve a just result than going to trial.” The upshot was a direction from the court that summary judgment rules be interpreted broadly, “favouring proportionality and fair access to the affordable, timely and just adjudication” of claims.

According to Jill Yates in McCarthy Tétrault LLP's Vancouver office, Hyrniak“broadens considerably” the parameters for granting summary judgment “by allowing judges to determine whether summary disposition is a more proportionate way than a trial to achieve a just result in light of the available evidence.”

While access to justice is most commonly framed in the context of individuals, rather than businesses, it most certainly has significant meaning for business, especially small and medium-sized enterprises.

Which is not to say that Hryniak does not impact on big business. Consider, for example, the impact of Hryniak on class actions, where large enterprises often find themselves as defendants.

“Summary judgment motions are now a much more viable alternative in class actions, one that judges have certainly shown they are willing to use in a wide range of cases since the Hryniak decision,” Yates says. “It's a process that's a lot more appetizing than the cost and time associated with a full trial, and from defendants' perspective, a lot more appetizing than settling.”

Rejecting the traditional view that contractual interpretation involves pure questions of law, this case saw the court rule that the exercise engaged questions of mixed fact and law.

“It's rare to see the court turn the common law on its head,” Paterson says. “So many things depend on whether an issue is a question of law or of mixed fact and law, including the availability of civil appeals and reviews of arbitrators' decisions, that it will be a while before we see the full scope of this judgment.” At the core of the decision is the court's reaffirmation of a modern, contextual approach to contract interpretation, one that involves a consideration of the “surrounding circumstances” in giving meaning to an agreement.

“The idea that contract interpretation is more a factual than a legal exercise is a big change, especially in Ontario,” says David Quayat of Toronto's Lenczner Slaght Royce Smith Griffin LLP. “It sends the message that appeal courts need to give more deference to arbitrators and trial judges as to what parties meant to achieve in their commercial dealings.”

Paterson says that treating contractual interpretation as a question of mixed fact and law is “more intellectually honest” than regarding the exercise as a pure question of law.

“The pure question of law approach assumes that all words mean the same thing to everyone and that a judge – even one unfamiliar with the industry or the context involved – can tell you what the parties meant,” she says. “At the very least, the SCC's approach acknowledges that interpreting a contract can be a complicated thing and that we all come to agreements from different perspectives and with different objectives.”

In other words, the SCC's approach accords with commercial reality and with the way courts have been approaching contractual interpretation in recent years. “These days, courts are always asking what parties are trying to do,” Paterson says.

Sattva turned on the meaning of a finder's fee agreement. The parties disagreed as to the valuation date for the shares on which the fee was based. Sattva's interpretation, which was ultimately accepted by the arbitrator, entitled the company to some 11.4-million shares, almost five times as many as the interpretation sought by Creston would have yielded.

Creston sought leave to appeal under BC's Arbitration Act, which allows leave only on questions of law. The BC Supreme Court denied leave, holding that there was no such question. On further appeal, the Court of Appeal reversed, ruling that leave should have been granted.

It then fell back to the BC Supreme Court to hear the appeal on the merits, which it dismissed, upholding the arbitrator's decision. Creston appealed again, this time successfully: the Court of Appeal, which reviewed the arbitrator's decision on the standard of correctness, ruled that the initial decision was wrong.

The SCC granted leave both on the Court of Appeal's leave to appeal and merits rulings.

Ultimately, the high court ruled that reasonableness, not correctness, was the appropriate standard for review of an arbitrator's decision on contractual interpretation (except on constitutional questions or questions of general importance to the legal system). According to Paterson, the same standard should apply to review of a trial judge's decisions regarding contractual interpretation.

“It wouldn't make sense to give arbitrators more deference [by reviewing on the basis of reasonableness rather than correctness] than first-level judges,” Paterson says. “But what this means is that even when leave is not required, the threshold for success on an appeal from a trial judgment involving contractual interpretation is higher than it was before.”

Sattva, then, lends itself to more certainty and finality in the sense that parties can have greater confidence in first-instance judgments. But the high court did not go so far as to state that contractual interpretation can never be a pure question of law.

“That occurs when the issue engages what's called an ‘inextricable principle of law,'” Quayat says. “But that approach can make the scope of pure matters of law very narrow.”

“From a private-sector point of view, UFCW is the most important privacy case that ever reached the Supreme Court because it put limits on what constitutes protectable private information under privacy laws,” says David Young of Toronto's David Young Law. “It's the strongest statement the court has made regarding the nature and purpose of privacy protection in the private sector.”

UFCW arose in the context of a strike at the Palace Casino in Edmonton. The union videotaped the picket line, videotaping certain individuals who crossed the line. While a sign at the site indicated that the recordings might be posted to a website, none were. Still, some of the individuals who were taped complained to the provincial Privacy Commissioner, alleging that their privacy rights under Alberta's Personal Information Protection Act (PIPA) had been infringed.

The Supreme Court ruled that the PIPA provisions that inhibited the union's right to collect and use the recordings were unconstitutional as infringing the union's right of freedom of expression because the statute impaired the union's ability to communicate and persuade the public of its cause.

The key problem with the legislation was that it protected “virtually all personal information” without regard to its context. More particularly, PIPA failed to distinguish between personal information in general and personal information that was private. In this particular case, the information collected was available in the public space: while it remained personal, it was not private.

“The decision balances the protections that an individual may expect from privacy laws both in the context of public space and in the context in which the information may be used,” Young says. “The individuals who crossed the picket line here knew they could be observed by the world at large, so the value of protecting their information was just not that strong.”

According to Chantal Bernier, formerly Interim Privacy Commissioner of Canada and now Counsel in Dentons LLP's Ottawa office, the ruling has implications well beyond the industrial relations framework. “Freedom of expression and privacy are in inherent juxtaposition and the tension between them arises constantly,” she says. “What business should register here is the fact that freedom of expression puts contours around privacy rights.”

By clarifying the test for Aboriginal title over non-treaty lands and confirming that provincial laws may continue to apply to such, subject to considerations of “justified infringement” under s. 35 of the Constitution Act, 1982, Tsilhqot'in has significant implications for development activities in BC and elsewhere. More particularly, by adopting a broad “territorial” approach as opposed to a “site-specific” approach, the SCC lowered the threshold for establishing continuous and exclusive occupation over lands, and adopted a more flexible approach to determining title by emphasizing the individual characteristics of both the claimants and the land.

The key issue in this litigation was whether the Tsilhqot'in First Nation had established title to all or part of the claimed lands. The trial decision focused on the band's nomadic nature and the seasonal nature of the uses that could be made of the land. The Court of Appeal applied a higher threshold, one of “intensive presence at a particular site,” and rejected the territorial approach ultimately adopted by the SCC. “The defining features of the Aboriginal title framework as set out by the Supreme Court are now central to land resource management in many parts of Canada, including almost all of BC, part of Atlantic Canada, parts of Ontario and Québec and some of the North,” says Wally Braul in Bennett Jones LLP's Calgary office.

Consequently, Tsilhqot'in has significant implications for proponents of development projects on Aboriginal land.

“The decision clarifies, if not introduces, a significant new type of leverage – focusing on property rights – available to Aboriginal groups,” Braul says. “Future Aboriginal litigation may increasingly be about proving title, as opposed to alleged deficiencies over the adequacy of consultation.”

According to Braul, the case also creates uncertainty about resource projects where Aboriginal title is an issue and boosts First Nations arguments that treaties did not extinguish title but were merely peace treaties.

CLIENTS > FIRMS > LAWYERS

Roger William, on his own behalf, on behalf of all other members of the Xeni Gwet'in First Nations Government and on behalf of all other members of the Tsilhqot'in Nation > Rosenberg Law > David M. Rosenberg, Q.C.

Roger William, on his own behalf, on behalf of all other members of the Xeni Gwet'in First Nations Government and on behalf of all other members of the Tsilhqot'in Nation > Woodward & Company > Jay Nelson, David M. Robbins and Dominique Nouvet

Her Majesty The Queen in Right of the Province of British Columbia, Regional Manager of the Cariboo Forest Region > Borden Ladner Gervais LLP > Patrick G. Foy, Q.C., and Kenneth J. Tyler

The test for infringement in Canadian copyright law maintains its distinguishing characteristics after the SCC categorically refused an invitation to adopt the US approach advocated by Films Cinar in this case.

Robinson developed an idea for a children's program called The Adventures of Robinson Curiosity. He wrote scripts and synopses, drew sketches and storyboards, and even prepared marketing materials. The show, however, failed to attract investors.

Ten years later, Cinar came up with Robinson Sucroë, a story created by some of the people who had been exposed to Robinson's concept. Robinson sued Cinar and others, and was awarded damages of $5.2 million at trial and ultimately $4 million in the SCC.

Cinar, the unsuccessful appellant in the high court, asked the Supreme Court to adopt what is essentially the American approach to analyzing copyright infringement.

“Cinar asked the court to dissect Robinson's work to determine what was original and only after that to compare the original element with the copied work,” Régimbald explains. “Instead the court confirmed that the proper approach was to look at the cumulative effect of what had been copied and then to determine whether the copy intruded on the originator's skill and judgment as expressed in his work as a whole.”

The court also affirmed the propriety of using experts in appropriate copyright cases. “The appellants had argued that the audience, composed of children aged five to 12, would not think Cinar's program was a copy, but the court held that what was a copy was not always evident, and that in certain cases an expert was required to point out the particular similarities,” Régimbald says.

Finally, the court rejected the argument that a calculation of damages should not include Cinar's profits from the soundtrack because the soundtrack did not copy Robinson's work. “The Supreme Court rejected that argument because Cinar's soundtrack had no commercial value apart from the TV series itself,” Régimbald says. “This principle would also apply to patent and trademark cases.”

Finally, from an even more general perspective, the SCC confirmed that the $100,000 cap on non-pecuniary damages established by the court in the 1970s was inapplicable to damages that were not a result of personal injuries.

This case, in which the SCC confirmed that the bar for certification in Québec is lower than in the common-law provinces, gives the province a decided edge as Canada's class-action haven.

The decision came in the case of a retired Vivendi worker who sought authorization for a class action after a new employer unilaterally amended the company's private health insurance plan. The Québec Superior Court refused to authorize the class action, but the Québec Court of Appeal overturned that decision.

A condition of bringing class actions in Québec is that at least one common question must exist that advances every class member's claim. The principle is known as “commonality.” But the SCC ruled that the requirement to advance the resolution of every class member's claims did not mean that the answer to the common question must be identical for each individual or benefit them similarly.

The court held that, “To meet the commonality requirement of article 1003 (a) of the Québec Code of Civil Procedure, the applicant must show that an aspect of the case lends itself to a collective decision and that the parties will have resolved a not insignificant portion of the dispute. It is enough that the answer to the question does not give rise to conflicting interests among the members,” write André Durocher and Enrico Forlini of Montréal in Fasken Martineau DuMoulin LLP's Litigation and Dispute Resolution Bulletin. “In short, at the authorization stage, the approach to be taken to the commonality requirement in Québec civil procedure is a flexible one.”

The SCC was also careful to point out that the commonality requirement in the Québec legislation was broader than corresponding provisions in Canada's other class-action provinces.

“The situation in Québec now is that plaintiffs are not required to show that class actions are the best procedure, or that any common questions have a common answer,” says Christine Carron in Norton Rose Fulbright LLP's Montréal office. “All plaintiffs need is a common question, which amounts to no more than a question of fact or law that's not negligible and somehow advances the resolution of the issues for class members.”

Alliance of Manufacturers & Exporters of Canada, carrying on business as Canadian Manufacturers & Exporters, and Canadian Chamber of Commerce > McCarthy Tétrault LLP Michael A. Feder and Pierre-Jérôme Bouchard

7.AIC LIMITED V. FISCHER(SCC, ON)

The Supreme Court of Canada has allowed investors to proceed with a class action despite having achieved a regulatory settlement against two mutual funds who participated in the market timing scandal. The decision suggests that regulatory settlements will not in themselves be an automatic bar to class actions.

Fischer arose when the Ontario Securities Commission commenced proceedings against five defendant funds (three of which have settled the class actions) for failing to act in the public interest in relation to market timing activity in their funds. The regulatory proceedings ended when the funds agreed to pay $205 million to aggrieved investors — less than the full value of the investors' damages. All the settlements specified that they were without prejudice to the rights of investors to bring civil suits against the mutual fund managers with respect to the same subject matter. Dennis Fischer and other representative plaintiffs initiated the class action after the OSC proceedings ended. The plaintiffs sought to recover the difference between the OSC settlement and the hundreds of millions of additional dollars they maintained were required to make full compensation to the investors.

At Fischer's core is the question of whether a class action is the preferable procedure for dispute resolution in such circumstances. In answering the question, the high court ruled that judges must go beyond the procedural differences between courts and regulatory bodies to examine the substantive aspects of a case.

There can be little doubt that this approach will complicate certification proceedings even further, for it means that judges must delve into the merits of a case sufficiently to determine the relative remedies that plaintiffs can achieve in different forums.

In Fischer, for example, the court found that there was some evidence to support the claim that the regulatory settlement of $205 million did not amount to full compensation.

“The court relied on expert evidence adduced by the plaintiff in support of this point and found that there was no reason to believe that this additional recovery, if achieved [in the class action], would be consumed by the costs of a class action,” says Laura Fric in Osler, Hoskin & Harcourt LLP's Toronto office, who represents defendants in class actions.

The court's conclusion was facilitated by the fact that the settlements had occurred and the sum awarded to the plaintiffs was easily ascertainable. The question would be a far more difficult one, however, if plaintiffs brought a class action before regulatory proceedings were commenced or completed, and a court had to determine the likely outcome of the regulatory proceedings as well as the class action.

The upshot would almost certainly be a time-consuming and expensive battle of experts. “The Supreme Court's approach to determining preferability, unlike the Court of Appeal's approach, opens the door to competing expert evidence relating to potential recoveries and the costs of class proceedings, and the potential costs of pursuing a class action as opposed to other forms of recovery,” Fric says.

And if that's not complicated enough, Fric adds that “costs to defendants and the judicial system could also be part of the future analysis in some cases, particularly where other less costly roads to recovery, including regulatory avenues, are available.”

According to many observers, this decision, which holds that only conduct capable of giving rise to a civil cause of action can support the tort of unlawful interference with economic relations, spells the death knell for the tort.

“A.I. practically closes the door on pleading the tort because it narrows it so much,” Paterson says. “It will impact how lawyers plead franchise cases or construction cases, or indeed any case that involves a third party who is not one of the contracting parties.”

From a greater perspective, A.I. appears to be part of a continuing effort by the SCC to rationalize the common law and make it clearer — part of the high court's drive to make the judicial system more efficient.

“Limiting cases where the tort of interference of economic relations can be viably pleaded will make settling cases easier because the tort has always been somewhat difficult for lawyers and parties to get their heads around,” Paterson says. “Currently, people just throw the tort into their pleading but no one wants to bring a motion to strike because motions are so expensive.”

Attorney General of British Columbia > Attorney General of British Columbia > Christina Drake

9.R. V. SPENCER(SCC, SK)

Internet service providers will be among those who most welcome this ruling that police cannot obtain the identity of an Internet user without a warrant or court order. Telecommunications companies, particularly ISPs, reportedly receive hundreds and even thousands of such unauthorized requests for information from police each year.

The issue in R. v. Spencer arose in the context of a child pornography case. Police obtained the accused's IP address by monitoring his Internet file sharing, then asked the ISP to identify the name associated with that address. The ISP complied, and the police used the information to identify the accused and seize his computer.

In support of the seizure, the police maintained that federal privacy legislation, known as PIPEDA, permitted disclosure of personal information for law enforcement purposes without a warrant. The accused argued that disclosure of his identity was an unreasonable search under s. 8 of the Charter; that he had a reasonable expectation of privacy, including the secrecy of his identity, in his Internet usage; that PIPEDA protected his personal information; and that PIPEDA's lawful authority exemption did not apply.

In a unanimous judgment, the SCC agreed with the accused, ultimately deciding that disclosure of his identity amounted to an unreasonable search. The upshot is that absent a court order or warrant, an organization may not disclose personal information to police.

The decision will have a significant impact on the law of privacy generally. “Spencer resolves the debate as to whether basic subscriber information [BSI] is private information or phone book information by recognizing that BSI is a clue to a person's mind and is highly revealing of interests, allegiances, concerns, health and other preoccupations, and affiliations,” Bernier says.

Finally, by recognizing the right to anonymity, then, Spencer debunks the notion that there is no privacy on the Internet or that there are no privacy rights in information made known in a public context.

“Business will now have to look for statutory authority, a court order or a warrant to divulge personal information of any kind,” Young says.

The importance of this decision, which deals with mandatory retirement and holds that professional partnerships have the right to force partners to leave at a specified age, is underlined by the fact that accounting giants Ernst & Young LLP, KPMG LLP, Deloitte LLP, PricewaterhouseCoopers LLP, BDO Canada LLP and Grant Thornton LLP all intervened in the case. In the legal context, it becomes even more important in an era when non-legal ownership of law firms is a live issue.

Mitch McCormick was a partner in Fasken Martineau DuMoulin LLP's, Vancouver office for 30 years. The partnership agreement provided for mandatory retirement at 65. McCormick, alleging discrimination, challenged the provision before the British Columbia Human Rights Tribunal. Fasken challenged the Tribunal's jurisdiction, arguing that the province's human rights legislation applied only to employees and not to partners. The Supreme Court of Canada upheld rulings by the Tribunal and the BC Court of Appeal that the legislation did not apply to McCormick.

“The court reasoned that the key to determining who is in an ‘employment relationship' for purposes under the Human Rights Code is the degree of control and the extent to which the worker is subject and subordinate to someone else's decision-making over working conditions and remuneration,” says Natalie MacDonald of Toronto's Rudner MacDonald LLP. “McCormick's status as an equity partner, and his ownership, sharing of profits and losses, as well as the right to participate in management made him part of the group that controlled the partnership, not a person vulnerable to its control.”

But the court did not rule out the possibility that partners could in certain circumstances be in an employment relationship. “Such a finding would only be justified where the powers, rights and protections normally associated with a partnership were greatly diminished, as might occur in the case of a non-equity or income partner,” MacDonald says.